House Passes Historic Coronavirus Stimulus Package

Today, the House of Representatives passed and President Trump is expected to sign into law a $2 trillion fiscal stimulus bill designed to offset the impact of the coronavirus on the U.S. economy and the American public. Called the Coronavirus Aid, Relief, and Economic Security (CARES) Act, this historic bipartisan stimulus package will provide timely financial aid to American workers, loans to small businesses, and lending and direct aid to impacted industries.

Today, the House of Representatives passed and President
Trump is expected to sign into law a $2 trillion fiscal stimulus bill designed
to offset the impact of the coronavirus on the U.S. economy and the American
public. Called the Coronavirus Aid, Relief, and Economic Security (CARES) Act,
this historic bipartisan stimulus package will provide timely financial aid to American
workers, loans to small businesses, and lending and direct aid to impacted
industries. The combination of this third stimulus package and the Federal
Reserve’s pledge to provide market liquidity, renew its asset-purchase program,
and keep interest rates near zero, could provide much-needed support to the
capital markets.

After a week of wrangling over specifics between the
House of Representatives, the Senate, and the White House, President Trump is
expected to sign the CARES Act into law late this afternoon. It includes aid totaling
10 percent of gross domestic product (GDP), making it, by far, the largest
economic relief in U.S. history. This comes on top of the Fed’s actions, which
equate to another 10 percent of GDP.

As you would expect, the CARES Act covers a lot of ground.
A few notable highlights include:

Individuals making $75,000 a year or less (as
reported on their 2018 federal income tax returns) will receive a $1,200 check.
Couples making $150,000 or less will receive $2,400, with an additional $500
per child. The check amount declines gradually as income rises. Individuals
making $99,000 or above or married couples making $198,000 or more will not receive
a check. According to news sources, checks will be cut by April 6.

The Act also includes roughly $130 billion of
assistance for hospitals and other healthcare providers for supplies and
equipment, $350 billion for small businesses to help them meet payrolls, and $500
billion in aid for corporations in hard-hit industries, such as airlines and
cruise lines, as well as state and local governments. Companies receiving
government loans are prohibited from stock buybacks and must limit bonuses paid
to executives.

Also included is a $370 billion fund to provide
grants and low-interest loans for small businesses through the Small Business
Administration to mitigate layoffs and support payroll. In addition, employers
will get a payroll tax deferral (with the ability to stagger repayment of those
taxes in the future). The deferral only applies to employers, and not to employees.

The Act also bolsters unemployment insurance by
increasing and extending payments and including workers who don’t typically
qualify, such as gig economy workers, furloughed employees, and freelancers.

States will receive $150 billion of assistance to offset the virus’s revenue impact, including $400 million of aid for the upcoming 2020 elections to help expand voting by mail, early voting, and online voter registration.

Roughly three weeks into the coronavirus-induced market
selloff, the capital markets remain in recalibration mode. While the stock
market’s daily price swings and the bond market’s unusual behavior have disconcerted
many investors, this week has brought some relative calm as Americans awaited
the outcome of stimulus deliberations. Meanwhile, the coronavirus remains a
public—and personal—health issue as cities and states ask residents to pause
their daily lives to stem the virus’s spread. Some locales have been hit hard,
while others have yet to feel the impact.

Despite passage of this historic stimulus package, you
should expect continued market volatility as investors weigh new information—about
both public health and the economic impact of the virus—and adjust their
expectations. This recalibration can take time as trends and impacts take time
to emerge. In
particular, investors are paying special attention to the resumption of
economic activity in China, as it was the first part of the world to face a
widespread shutdown in activity and is now the first to emerge from it.

As always, a well-diversified portfolio tailored to your
appetite for risk and personal financial goals and objectives is the best
long-term strategy and can help provide the peace of mind necessary to stay the
course through volatile markets. Periods like the one we are experiencing are causes
of concern, but they often also create opportunity and prompt long-term
investors to consider their asset allocations and ensure that they are taking
an appropriate level of risk.

We will be tracking the virus’s spread and the resulting
economic impacts actively, and we will keep you apprised of what we learn. In
the meantime, please reach out to your CAPTRUST financial advisor if you have
questions or concerns.

Author(s)

John D. Curry

Legal Notice

This document is intended to be informational only. CAPTRUST does not render legal, accounting, or tax advice. Please consult the appropriate legal, accounting, or tax advisor if you require such advice. The opinions expressed in this report are subject to change without notice. This material has been prepared or is distributed solely for informational purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. The information and statistics in this report are from sources believed to be reliable but are not guaranteed by CAPTRUST Financial Advisors to be accurate or complete. All publication rights reserved. None of the material in this publication may be reproduced in any form without the express written permission of CAPTRUST: 919.870.6822.